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U.S. Economy now below 2002 levels in many sectors

The United States economy is now producing less than it did in 2002 in seven of ten sectors monitored by the Federal Reserve.Construction is now down 20% over a baseline 2002 level.

Capacity utilization is down in every category measured by the Federal Reserve, compared to historical averages, except mining, which is slightly above its historical norm

Industrial production decreased 0.5 percent in April after having fallen 1.7 percent in March. Production in manufacturing declined 0.3 percent in April and was 16.0 percent below its recent peak in December 2007. The decreases in manufacturing in April remained broadly based across industries. Outside of manufacturing, the output of mines fell 3.2 percent, as oil and gas field drilling and support activities continued to drop. The output of utilities moved up 0.4 percent. At 97.1 percent of its 2002 average, industrial output in April was 12.5 percent below its year-earlier level. The capacity utilization rate for total industry fell further in April, to 69.1 percent, a low over the history of this series, which begins in 1967.

The output of most major market groups fell in April, although several categories recorded gains. The production of consumer goods was unchanged, as an increase in consumer durables was offset by a small decline in nondurables. The output of consumer durables increased 0.8 percent, with advances in automotive products; appliances, furniture, and carpeting; and miscellaneous goods. A decrease in the output of home electronics slightly offset those gains. The production of automotive products increased for a third consecutive month, as motor vehicle assemblies continued to move up from the exceptionally low levels earlier this year. The production of consumer nondurable goods moved down 0.2 percent in April; a decline of 0.5 percent in non-energy nondurables more than offset a gain in consumer energy products. All major categories of consumer non-energy nondurables fell; the index for consumer paper products posted a particularly large decrease, primarily because of declines in publishing.

The output of business equipment decreased 0.6 percent in April after monthly declines that averaged 2-3/4 percent in the first three months of the year. The declines in the production of both information processing equipment and industrial and other equipment moderated in April. The index for information processing equipment edged down 0.3 percent, and the index for industrial and other equipment moved down 0.6 percent. Elsewhere in business equipment, the output of transit equipment dropped 0.9 percent in April, primarily as a result of lower output of civilian aircraft.

The output of defense and space equipment was unchanged in April; production in this sector has remained little changed, on net, since the third quarter of 2007.

The output of construction supplies decreased 1.1 percent in April after a drop of 2.9 percent in March. Lower output of architectural and structural metals and stone mining and quarrying was the primary contributor to the decline in April in the production of construction supplies. A further reduction in the output of printing contributed to a decrease of 0.4 percent in the production of business supplies.

The output of materials to be further processed in the industrial sector decreased 0.7 percent in April; the index was 15 percent lower than its year-earlier level. Gains in textile, paper, and chemical production helped lift the output of nondurable materials, which rose 0.3 percent in April. Durable materials, in contrast, dropped 0.9 percent, as the output index for equipment parts and for other durable materials moved down. The production of energy materials fell 1.5 percent; a decrease in coal mining as well as a drop in oil and gas field services contributed to the weakness in this sector.

Industry Groups

Manufacturing output declined 0.3 percent in April after falling 2.1 percent in March. The factory operating rate edged down 0.1 percentage point to 65.7 percent in April. The production index for durable goods decreased 0.3 percent, with declines in most categories partially offset by gains in the production of wood products, nonmetallic mineral products, motor vehicles and parts, and miscellaneous manufacturing. The production of nondurable goods edged down 0.1 percent. The production indexes for paper products and for petroleum and coal products advanced, but the indexes for printing and support and for apparel and leather fell substantially; output indexes for other nondurables industries were either unchanged or fell slightly. Production for the other manufacturing category, which consists of publishing and logging, fell 2.6 percent.

The output of utilities moved up 0.4 percent in April with gains in both electric and natural gas utilities. The operating rate for utilities moved up 0.2 percentage point to 80.7 percent, yet remained below its 1972-2008 average. The output index for mining dropped 3.2 percent in April, and its utilization rate fell to 82.5 percent, roughly 5 percentage points below its 1972-2008 average.

Capacity utilization rates in April at industries grouped by stage of process were as follows: At the crude stage, utilization dropped 0.9 percentage point to 78.5 percent, a rate 8.1 percentage points below its 1972-2008 average; at the primary and semifinished stages, utilization dropped 0.2 percentage point to 66.7 percent, a rate 15.3 percentage points below its long-run average; and at the finished stage, utilization slipped 0.2 percentage point to 67.9 percent, a rate 9.8 percentage points below its long-run average.